West Texas Intermediate (WTI) crude oil rebounded on Thursday, gaining approximately 2.50% to trade near $90.45–$90.50 after three consecutive days of decline, driven by ongoing disruptions in the Strait of Hormuz and persistent geopolitical tensions in the Middle East [1][2]. The rebound in oil prices comes despite recent optimism that the United States and Iran could reach an agreement to end the conflict and reopen the Strait, a critical maritime route for global energy trade. However, both sources emphasize that uncertainty remains high, as shipping activity continues to face significant disruption due to a dual blockade imposed by US forces and Iran [1][2].
Iran is reportedly seeking greater control over the Strait of Hormuz, with state media indicating that any transit tolls imposed on vessels would be processed through Iranian banks, underscoring Tehran’s efforts to assert authority over this strategic chokepoint [1][2]. This ongoing tension has kept oil prices elevated, which in turn has supported the Canadian Dollar (CAD) and contributed to a decline in the USD/CAD currency pair, which traded around 1.3708, its lowest level since March 23 [2].
On the diplomatic front, both articles note that US President Donald Trump signaled the possibility of renewed negotiations with Iran as early as this week, following unsuccessful talks in Islamabad last weekend [1][2]. Additionally, Trump announced a 10-day ceasefire between Lebanon and Israel, set to begin at 5:00 pm Eastern Time, which has supported hopes for regional de-escalation, though overall tensions remain high and continue to underpin the geopolitical risk premium in oil prices [1].
Market implications extend beyond oil, as higher energy costs are keeping global inflation concerns in focus. While Canada’s inflation remains below the Bank of Canada’s 2% target, policymakers are expected to adopt a wait-and-see approach as energy-driven inflation risks rise [2]. In contrast, US inflation remains above the Federal Reserve’s 2% target, with March CPI rising to 3.3% year-over-year from 2.4%, dampening expectations for Fed rate cuts and reinforcing the likelihood that interest rates will remain unchanged in the near term [2]. On the US economic data front, Initial Jobless Claims fell to 207,000, below forecasts of 215,000, while Industrial Production dropped 0.5% month-over-month in March, missing expectations of a 0.1% rise [2].
Traders remain highly attentive to developments surrounding the Strait of Hormuz blockade and any diplomatic progress, as both factors could significantly influence the global oil supply-demand balance and broader financial markets [1][2].
CONCLUSION
The rebound in WTI oil prices reflects persistent geopolitical risks and supply disruptions in the Strait of Hormuz, despite some diplomatic overtures between the US and Iran. Elevated oil prices are supporting the Canadian Dollar and influencing inflation expectations in both Canada and the US. Market participants are closely monitoring further developments in the region and upcoming diplomatic talks for potential impacts on energy markets and monetary policy.